UNEARNED INCOME |
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| UNEARNED INCOME | 5. UNEARNED INCOME
Unearned income is attributable to payments made to the Company and its wholly owned subsidiary pursuant to two license agreements for which income is recognized over the terms of the agreement. On April 7, 2021 the Company entered into an agreement (“Agreement”) with Oncology Pharma, Inc. (“Licensee”) whereby the Company granted to Licensee an exclusive right and license for the development and commercialization of certain intellectual property (“License IP”) for the treatment in humans of pancreatic cancer for a term of fifteen years from April 7, 2021.
The License IP consists of antigen specific cancer vaccines in which modified mRNA is administered to produce epitopes able to produce an immune response which augments likelihood of successful induction of immunity. An epitope is the part of an antigen that is recognized by the immune system.
As consideration to “the Company” for the rights and license granted pursuant to the Agreement Licensee shall:
(a) pay to the Company a nonrefundable fee of $55,000 no later than April 20,2021
(b) pay to the Company royalties equal to five percent (5%) of the Net Sales as Net Sales are defined in the Agreement of any Licensed Products in a quarter.
(c) pay to the Company ten percent (10%) of all consideration (in the case of in-kind consideration, at fair market value as monetary consideration) received by Licensee from sublicensees, excluding royalties from sublicensees based on Net Sales of any Licensed Products for which Regen receives payment.
Licensed Product is defined in the Agreement as
(a) any method, procedure, service or process that incorporates, uses, used, is covered by, infringes or would infringe any of the License IP in the U.S. or foreign jurisdictions; and
(b) any apparatus, material, equipment, machine or other product that incorporates, uses, used, is covered by, infringes or would infringe any of the License IP in the U.S. or foreign jurisdictions but for the rights granted pursuant to the Agreement.
In the event that development of the License IP by the Licensee is not commenced as of the date that is nine months from the effective date of the Agreement the rights and license granted pursuant to the Agreement shall become nonexclusive.
On April 7, 2021 KCL Therapeutics, Inc. entered into an agreement (“Agreement”) with Oncology Pharma, Inc. (“Licensee”) whereby KCL granted to Licensee an exclusive right and license for the development and commercialization of certain intellectual property (“License IP”) for the treatment in humans of colon cancer for a term of fifteen years from April 7, 2021.
As consideration to KCL for the rights and license granted pursuant to the Agreement Licensee shall:
(a) pay to KCL a non-refundable fee of common shares of Oncology Pharma, Inc. no later than April 20, 2021
(b) pay to KCL royalties equal to five percent (5%) of the Net Sales as Net Sales are defined in the Agreement of any Licensed Products in a quarter.
(c) pay to KCL ten percent (10%) of all consideration (in the case of in-kind consideration, at fair market value as monetary consideration) received by Licensee from sublicensees, excluding royalties from sublicensees based on Net Sales of any Licensed Products for which KCL receives payment.
Licensed Product is defined in the Agreement as (a) any method, procedure, service or process that incorporates, uses, used, is covered by, infringes or would infringe any of the License IP in the U.S. or foreign jurisdictions; and (b) any apparatus, material, equipment, machine or other product that incorporates, uses, used, is covered by, infringes or would infringe any of the License IP in the U.S. or foreign jurisdictions but for the rights granted pursuant to the Agreement.
In the event that development of the License IP by the Licensee is not commenced as of the date that is nine months from the effective date of the Agreement the rights and license granted pursuant to the Agreement shall become nonexclusive.
The fair value of the stock and cash prepaid to the Company and KCL was $1,850,000 and $55,000, respectively. These amounts are recognized as revenue on a straight-line basis over the 15-year term of the Agreement, which commenced on April 7, 2021 and expires on April 6, 2036.
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